Question

In: Accounting

A business is preparing its master budget. It manufactures and sells only one product. Two raw...

A business is preparing its master budget. It manufactures and sells only one product. Two raw materials are used in the manufacturing of this product.

How often would you recommend the budget be analysed and updated?

Solutions

Expert Solution

The master budget is the aggregation of all lower-level budgets produced by a company's various functional areas, and also includes budgeted financial statements, a cash forecast, and a financing plan.

How often would you recommend the budget be analysed and updated?

Budgeted figures cannot be permanent it always requires changes according to time and changing situations or circumstances.

There is no such restrictions that how often Master budget should be updated it depends on company to company .

The external forces may lead to changes in Master budget so if the external forces are stable then there may be less updation required in the master budget but in tha case where external forces are unstable lot of updations are required time to time.

so whenever company feels any change in situations company should update the master budget regardless of how often it should be as no such estimates can be made that how the future situations would be.


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